planningMATTERS • with pvw law
another new taxact SMALL BUSINESS JOBS ACT OF 2010
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another
year end. Another Tax Act. I am providing a summary of a few of the provisions of the Small Business Jobs Act of 2010.
Cell phone deductions. The legislation removes cell phones and similar telecommunications equipment (including PDA’s and Blackberry devices) from the “listed property” (items obtained for business but which lend themselves readily to personal use) rules. The new rule makes it easier for employers that provide cell phones to employees as well as for employees who use their own cell phones. (The new rule makes it easier for employers and employees to do what?) Taxpayers must still be able to demonstrate business use.
Deductibility of health insurance for purposes of calculating self employment tax. The new law allows business owners to deduct health insurance costs incurred in 2010 for themselves and their family members incurred in 2010 in calculating self employment tax.
Distributions from elective deferral plans may be rolled over to designated Roth accounts. The new law allows 401(k), 402(b) and 457(b) plans to permit participants to roll over their pre-tax account balances into a designated Roth account. The amount of the rollover will be includible in taxable income except to the extent it is a return of after-tax contributions. Enhanced small business expensing. In order to help small businesses quickly recover from the cost of certain capital expenses, small business taxpayers can elect to write off the cost of these expenses in the year of acquisition in lieu of reporting them over time through depreciation. The new law allows taxpayers to expense up to $500,000 of qualifying
property placed in service in tax years beginning in 2010. The annual limit is reduced (but not below zero) by the amount by which qualified property placed in service in the applicable tax year exceeds $2,000,000.
100 percent exclusion of gain from the sale
by mary e. vandenack of small business stock for qualifying stock. Under the new law, individuals can exclude up to 100 percent of their gain on the sale of qualified small business stock that is acquired in 2010 after the date of enactment of the new law and held for more than five years.
S corporation holding period. In previous legislation, the holding period to avoid built-in gains tax on assets held by an S corporation that was previously a C corporation became seven years if the seventh year in the holding period preceded 2009 or 2010. The new law shortens the holding period to five years if the fifth tax year in the holding period precedes the tax year beginning in 2011.
Boosted start-up expenditures. The new law allows taxpayers to deduct up to $10,000 in trade or business start-up expenditures for 2010. The amount that can be deducted is reduced by the amount by which start-up expenditures exceed $60,000. Extension of 50 percent bonus first year depreciation. The new law extends the ability to write off 50 percent of qualifying property to such property placed in service in 2010. For more information visit www.pvwlaw.com