PKF Texas – Entrepreneur’s Playbook®:2010 Tax Relief Act

by | Jan 7, 2011 | PKF Texas - The Entrepreneur's Playbook®

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Maybe this wasn’t first on your Holiday Wish List, but the December 17th signing of the 2010 Tax Relief Act by President Obama could put some extra "jingle" in your pocket in the New Year.  There are several business tax provisions contained in this legislation that may impact your business

Bonus Depreciation
Possibly one of the most favorable pieces of this legislation is the increase in bonus depreciation from 50% to 100% for new, qualifying property purchased after September 9, 2010 and before December 31, 2011 (property must be placed in service no later than 2012). Bonus depreciation is available to all taxpayers.  For taxpayers who purchased capital expenditures in the last four months of 2010, this is clearly an unexpected benefit and could significantly reduce your projected tax liability for the 2010 taxable year.

In lieu of deducting bonus depreciation, taxpayers may elect to accelerate refundable AMT and research credits for 2011 and 2012.

Section 179 Expensing
Previous legislation increased the limits for immediate expensing to $500,000 (with a $2 million maximum investment) for 2010 and 2011. The Tax Relief Act adjusts the 2012 limit for immediate expensing to $125,000 (instead of $25,000), and raises the maximum investment cap to $500,000 (instead of $200,000).

Research and Development Tax Credit
This credit had previously expired at the end of 2009. It has now been retroactively extended for two years through December 31, 2011.

Small Business Capital Gains
Previous legislation expanded the exclusion of gain from qualified business stock to 100% for stock acquired between September 27, 2010 and January 1, 2011. The Tax Relief Act now extends the 100% exclusion to stock acquired before January 1, 2012. This could be a significant factor to early stage investors currently evaluating start-up investment opportunities.

Work Opportunity Tax Credit (WOTC)
This credit, which encourages hiring from targeted groups, was set to expire August 31, 2011, but has now been extended to December 31, 2011.

Consult with your tax advisors for more in depth information about the 2010 Tax Relief Act. Tax updates from PKF Texas may be found at

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