 |
 |
||
 |
 |
||
|
|||
|
|
Tax Announcements How businesses are affected by tax changes in the Emergency Economic Stabilization Act of 2008 Dear Client: As I'm sure you're aware, on Oct. 3, 2008, the President signed into law the Emergency Economic Stabilization Act of 2008 (P.L. 110-343). Although virtually all of the press coverage of this law has concentrated on its hotly debated $700 billion financial industry bailout plan, the legislation also contains scores of mostly beneficial tax changes for business. Most of the new law's tax changes for business fall into one of these categories: tax changes that apply to a wide range of businesses; special tax breaks for disaster areas; and tax changes for specialized industries (there are numerous tax breaks relating to alternative energy production, but they are highly specialized and so not covered in this letter). Tax breaks that apply to a wide range of businesses. The major news for business is that the research tax credit has been extended through 2009. The new law also makes a number of important changes in the way the research credit is calculated, effective for tax years beginning after 2008. Other, widely applicable tax breaks for business include the following:
Tax breaks for businesses in disaster areas. The new law creates a new set of tax relief provisions for businesses hit by events such as storms, hurricanes, and floods anywhere in the U.S. that are declared to be federal disasters after 2007 and before 2010. These are of great importance to businesses because many federal disasters have already been declared in numerous states in 2008 and many others are likely to occur before the tax breaks sunset. Here's a summary of the new relief provisions: ... Qualified disaster expenses, such as cleanup (removal of debris, demolition of structures) and repairs, may be expensed. ... A 5-year net operating loss (NOL) carryback applies instead of the usual 2-year carryback. ... The maximum amount of machinery and equipment that may be expensed under Section 179 is increased by up to $100,000 for qualifying assets, and the investment-based phaseout of the expensing deduction is increased by $600,000. ... A 50% first-year bonus depreciation allowance applies to most types of machinery and equipment bought to rehabilitate or replace damaged property. A number of conditions must be met, and certain types of property are excluded. Tax breaks for specialized industries. Tax breaks in the new law mainly benefiting specific industries include the following: ... Farming—there's a 5-year quick depreciation writeoff for most farm machinery and equipment placed in service after 2008 and before 2010. ... Real estate, retailers, and restaurants—the 15-year depreciation writeoff for qualifying leasehold improvements and qualifying restaurant property has been extended through 2009. What's more, for property placed in service after 2008 and before 2010, (a) buildings as well as building improvements may qualify for the quick writeoff for restaurant property; and (b) the 15-year depreciation writeoff also applies to qualifying retail improvement property. ... Construction companies—the $2,000 tax credit for building energy efficient homes ($1 million for manufactured homes) has been extended to apply to homes acquired through 2009. Note that construction companies also may benefit indirectly from the extended and enhanced tax breaks for real estate, restaurants, and retailers. ... Mining—the tax credit for mine rescue training and the election to expense 50% of the cost of certain mine safety equipment both have been extended so that they apply through 2009. Please keep in mind that I've described only the highlights of how the new law affects businesses. If you would like more details, please call a tax representative at Beason & Nalley at 256-533-1720 or info@beasonnalley.com. Very truly yours, Also see: |
|
___________
|
