Tax Breaks Included in New Small Business Law

The new Small Business Jobs Act of 2010 includes some important tax breaks for businesses.

• The maximum Section 179 first-year expensing deduction doubles from $250,000 to $500,000 for qualified business property placed in service in 2010 and 2011, while the phase-out threshold rises from $800,000 to $2 million. Also, a maximum deduction of $250,000 may be claimed for qualified improvements to leasehold, restaurant, and retail property.
• The 50% “bonus depreciation” tax break, which had expired after 2009, is retroactively reinstated to January 1, 2010, for qualified property placed in service in 2010 (through 2011 for certain property).
• For 2010 only, the deduction for business start-up expenses doubles from $5,000 to $10,000, while the phase-out threshold rises from $50,000 to $60,000.
• An investor in “qualified small business stock” may be able to exclude 100% of the gain from the sale of stock acquired after September 27, 2010, and before January 1, 2011.
• The usual ten-year recognition period for triggering a “built-in gains” (BIG) tax after converting to S corporation status is reduced to five years for dispositions in 2011.
• General business credits arising in 2010 for “eligible small businesses” may be used to offset the alternative minimum tax (AMT) and can be carried back for five years.
• For 2010 only, self-employed individuals may deduct health insurance from the self-employment tax calculation.
• Employees no longer have to substantiate business use of cell phones and similar devices. Personal use is treated as a tax-free fringe benefit.
• Participants in 401(k), 403(b), and 457(b) plans can roll over funds to a designated Roth account. For 2010 rollovers, taxable income may be split between 2011 and 2012.

For details or tax planning assistance, give our office a call.

Dan established Gilliland and Associates, P.C. in 1987. For two decades the firm has offered a broad range of services to a diversified group of clients in many industries and businesses including real estate, personal and professional services, international trade, and nonprofit organizations.

As president of Gilliland and Associates, Dan provides his clients with extensive expertise and consultation in tax planning, corporate and personal taxes, coordinating and performing certified audits, IRS audits, and representation before the IRS.

Dan occasionally contributes articles to various business publications and is a sought after speaker for professional groups and organizations. Dan received his Bachelor of Science Degree in Accounting from the University of Maryland in 1984, graduating Cum Laude with academic distinction. He received his CPA in May of 1985 after his first sitting, and is licensed in Virginia and Maryland.

An active member of Toastmasters International, Dan has served two terms as his chapter’s President. He has also served one term as Area Governor of Toastmasters and one term as Division Governor of Toastmasters. Dan is also a member of Business Networking International’s (BNI) Herndon Business Exchange where he serves on his chapter’s membership committee. He is a member of the Virginia Society of CPA’s and a member of the American Institute of Certified Public Accountants. Dan is the president of the McLean Hills Condominium Association, serving on their board of directors for the last fifteen years.