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Highlights of the Small Business Jobs Act of 2010

Highlights of the Small Business Jobs Act of 2010

The House and Senate passed the “Small Business Jobs Act of 2010” and the President signed the bill today. Here are some highlights from the bill:

Dollar amounts for “Section 179” Expensing Liberalized

For tax years beginning in 2010, the 2010 Small Business Act increases the maximum Code Sec. 179 expensing amount from $250,000 to $500,000

Qualified Real Property Expensing

For any tax year beginning in 2010 or 2011, a taxpayer can elect to treat up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) as expensing-eligible property. (Certain types of property, such as that used for lodging, would not be eligible.) (Code Sec. 179(f)(1) ) The dollar cap applies to the aggregate cost of qualified real property. This change applies to property placed in service after Dec. 31, 2009, in tax years beginning after that date.

Automobile/Truck Depreciation Limits Increase by $8,000.

Depreciation deductions (including Code Sec. 179 expensing) that can be claimed for passenger autos is subject to dollar limits that are annually adjusted for inflation. The 2010 Small Business Act boosts the first year business-auto write-off by $8,000 (i.e., from $3,060 to $11,060 for autos and from $3,160 to $11,160 for light trucks or vans) for vehicles that are qualified property for bonus depreciation purposes (i.e., are new and acquired and placed in service in 2010).

Deduction for Start-Up Expenses Increased

For tax years beginning in 2010, the deduction for startup expenses under Code Sec. 195 is increased from $5,000 to $10,000 and the phaseout threshold is increased from $50,000 to $60,000.

Special One-Year 2010 Self-Employment Tax Break

For tax years beginning after Dec. 31, 2009, but before Jan. 1, 2011, when calculating self-employment taxes, the deduction for health insurance costs of a self-employed taxpayer can be taken into account (i.e., can be deducted) in computing net earnings from self-employment.

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