Congress has approved, and President Obama is expected to today at 3:50pm EST, a multi-billion dollar tax cut package, the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010”.
The new law follows through on the framework agreed to December 6th by President Obama and GOP leaders in Congress. The 2010 Tax Relief Act extends the Bush era individual and capital gains/dividend tax cuts for all taxpayers for two years. The bill also provides for an AMT “patch,” a one-year payroll tax cut, 100 percent bonus depreciation through 2011 and 50 percent bonus depreciation for 2012, a top federal estate tax rate of 35 percent with a $5 million exclusion, and more.
Here is a completed overview of the legislation provided by CCH.
Friday, December 17, 2010
Thursday, October 7, 2010
Small Business Jobs Act of 2010
Some good news for business owners, the Small Business Jobs Act of 2010 (H.R. 5297) was signed into law on September 27, 2010. One major component of the legislation is related to the purchase of equipment and leasehold improvements. Below we have outlined the key issues that may impact your business.
Section 179 Expensing Provision Modifications:
Increased amounts: For years starting in 2010 and 2011, the maximum Section 179 expense amount is increased to $500,000 (up from $250,000 in 2010) and the investment ceiling increases to $2,000,000 (up from $800,000 in 2010).Unless these amounts are changed or extended, for tax years beginning in 2012, the maximum Section 179 expense amount will be reduced to $25,000 and the investment ceiling threshold will be $200,000 (both of these amounts to be indexed for inflation).
Expanded Section 179 property: For years starting in 2010 and 2011, the Act expands the definition of Section 179 property to include qualifying real property (certain leasehold improvements, restaurant property and retail improvement property) and allows businesses to claim $250,000 of Section 179 expense on it. Note that for purposes of the $500,000 limitation mentioned above, no more than $250,000 can be claimed on qualifying real property.
“Qualifying real property” for this purpose is the following:
a) Qualifying leasehold improvements are:
• Interior improvements made to leased nonresidential real property,
• Occupied exclusively by the lessee or sub-lessee,
• Placed in service more than three years after the building was first placed in service, and
• Cannot constitute an enlargement of the building, nor can it be an elevator, escalator, a structural component benefitting a common area, nor an interior structural component.
b) Qualifying restaurant property is:
• Section 1250 property,
• An improvement to a building (or a building), and
• Where more than 50% of the square footage is devoted to the preparation of, and seating for on-premises consumption of, prepared meals.
c) Qualifying retail improvement property is:
• An improvement made to the interior of nonresidential real property,
• Has a portion open to the general public and used in retail sales,
• Placed in service more than three years after the building was first placed in service, and
• Cannot constitute an enlargement of the building, nor can it be an elevator, escalator, a structural component benefitting a common area, nor an interior structural component.
No amount of any claimed but unused Section 179 expense attributed to qualifying real property may be carried over to a tax year beginning after 2011. Furthermore, if Section 179 expense amount is claimed on both qualifying personal and real property and, due to the taxable income limitation, a carryover amount results, such carryover must be prorated between both types of property.
Off-the-shelf computer software: The provision qualifying off-the-shelf computer software as Section 179 property is extended for one year. Therefore such software qualifies as Section 179 property if placed in service in tax years beginning after 2002 and before 2012.
Revocation: A taxpayer’s ability to revoke a Section 179 election without the consent of the IRS is extended for one year. Therefore, a taxpayer may now revoke a Section 179 election with respect to any tax year beginning after 2002 and before 2012.
What You Should Consider – Section 179 Expense
There are number of challenges associated with applying the Section 179 provisions of the Small Business Jobs Act of 2010:
• The need to decide whether you should claim Section 179 and/or bonus depreciation on an asset.
• The need to calculate the maximum allowable Section 179 expense amount on qualifying property, taking into consideration the investment ceiling limitation, as well as the taxable income limitation,
• The need to determine if the business’s real property qualifies for claiming Section 179 expense,
• The need to prorate any carryover amount of Section 179 expense between personal and real property,
• The need to determine if computer software qualifies for the Section 179 expense deduction,
• The need to determine if the state income tax return allows Section 179 expense to be claimed, and
• The need to correctly determine the basis and gain/loss amounts for assets on which Section 179 expense is claimed.
Source (BNA & CCH)
Section 179 Expensing Provision Modifications:
Increased amounts: For years starting in 2010 and 2011, the maximum Section 179 expense amount is increased to $500,000 (up from $250,000 in 2010) and the investment ceiling increases to $2,000,000 (up from $800,000 in 2010).Unless these amounts are changed or extended, for tax years beginning in 2012, the maximum Section 179 expense amount will be reduced to $25,000 and the investment ceiling threshold will be $200,000 (both of these amounts to be indexed for inflation).
Expanded Section 179 property: For years starting in 2010 and 2011, the Act expands the definition of Section 179 property to include qualifying real property (certain leasehold improvements, restaurant property and retail improvement property) and allows businesses to claim $250,000 of Section 179 expense on it. Note that for purposes of the $500,000 limitation mentioned above, no more than $250,000 can be claimed on qualifying real property.
“Qualifying real property” for this purpose is the following:
a) Qualifying leasehold improvements are:
• Interior improvements made to leased nonresidential real property,
• Occupied exclusively by the lessee or sub-lessee,
• Placed in service more than three years after the building was first placed in service, and
• Cannot constitute an enlargement of the building, nor can it be an elevator, escalator, a structural component benefitting a common area, nor an interior structural component.
b) Qualifying restaurant property is:
• Section 1250 property,
• An improvement to a building (or a building), and
• Where more than 50% of the square footage is devoted to the preparation of, and seating for on-premises consumption of, prepared meals.
c) Qualifying retail improvement property is:
• An improvement made to the interior of nonresidential real property,
• Has a portion open to the general public and used in retail sales,
• Placed in service more than three years after the building was first placed in service, and
• Cannot constitute an enlargement of the building, nor can it be an elevator, escalator, a structural component benefitting a common area, nor an interior structural component.
No amount of any claimed but unused Section 179 expense attributed to qualifying real property may be carried over to a tax year beginning after 2011. Furthermore, if Section 179 expense amount is claimed on both qualifying personal and real property and, due to the taxable income limitation, a carryover amount results, such carryover must be prorated between both types of property.
Off-the-shelf computer software: The provision qualifying off-the-shelf computer software as Section 179 property is extended for one year. Therefore such software qualifies as Section 179 property if placed in service in tax years beginning after 2002 and before 2012.
Revocation: A taxpayer’s ability to revoke a Section 179 election without the consent of the IRS is extended for one year. Therefore, a taxpayer may now revoke a Section 179 election with respect to any tax year beginning after 2002 and before 2012.
What You Should Consider – Section 179 Expense
There are number of challenges associated with applying the Section 179 provisions of the Small Business Jobs Act of 2010:
• The need to decide whether you should claim Section 179 and/or bonus depreciation on an asset.
• The need to calculate the maximum allowable Section 179 expense amount on qualifying property, taking into consideration the investment ceiling limitation, as well as the taxable income limitation,
• The need to determine if the business’s real property qualifies for claiming Section 179 expense,
• The need to prorate any carryover amount of Section 179 expense between personal and real property,
• The need to determine if computer software qualifies for the Section 179 expense deduction,
• The need to determine if the state income tax return allows Section 179 expense to be claimed, and
• The need to correctly determine the basis and gain/loss amounts for assets on which Section 179 expense is claimed.
Source (BNA & CCH)
Thursday, June 24, 2010
Feds to Increase Audits
According to a recent article publised in the AICPA Corporate Taxation Insider you can see what the government is doing to close the Tax Gap.
Wednesday, June 23, 2010
Tax Alert from Daines Goodwin & Co - HIRE Act - Payroll Tax Forgiveness
If you have recently hired new employees, you may qualify for a 6.2% payroll tax incentive (forgiveness), in effect exempting you from the employer’s share of Social Security tax on wages paid to these new employees after March 18. As an employer you may qualify if the new employee meets the following:
• Employee begins employment after February 3, 2010, and before January 1, 2011
• Employee was unemployed or employed for less than 40 hours during that 60 day period ending on the date that employment begins, and
• Employee is not a family member related to the employer or owns more than 50% of the business
You must obtain certification from the employee that he or she was unemployed or employed for less than forty hours during the 60 days prior to the hire date using Form W-11 (pdf form). This form must be retained by the employer with their payroll and tax records to substantiate their eligibility for the Social Security exemption.
To claim the payroll tax exemption, the employer uses the Form 941, Employer’s Quarterly Federal Tax Return.
If you have any questions please give us a call to discuss.
• Employee begins employment after February 3, 2010, and before January 1, 2011
• Employee was unemployed or employed for less than 40 hours during that 60 day period ending on the date that employment begins, and
• Employee is not a family member related to the employer or owns more than 50% of the business
You must obtain certification from the employee that he or she was unemployed or employed for less than forty hours during the 60 days prior to the hire date using Form W-11 (pdf form). This form must be retained by the employer with their payroll and tax records to substantiate their eligibility for the Social Security exemption.
To claim the payroll tax exemption, the employer uses the Form 941, Employer’s Quarterly Federal Tax Return.
If you have any questions please give us a call to discuss.
I - 9 & E - Verification: Utah
Attention all Utah employers - New Utah law has been enacted requiring employers with 15 or more employees to electronically verify new employee’s eligibility to work goes into effect starting July 1, 2010.
A new Utah law requiring employers with 15 or more employees to electronically verify their new employee’s employment authorization was signed into law by Governor Herbert earlier this year in a bill created to respond to immigration reform. July 1, 2010 is the date the law will begin to be enforced. The law basically mandates that all Utah employers who have 15 or more employees during the year use an electronic verification process to check all new hires employment eligibility before work begins. It was designed to reduce the number of illegal aliens from entering the work force. This E-Verification process does not replace the current requirements for completing Form I-9 on all new hires, it only verifies the validity of the information provided on the form.
What is E-Verify?
E-Verify is a free, internet based system that is linked with the Social Security Administration and was designed to give employers immediate results as to the status of a newly hired employee. E-Verify is a federal program that has been available for several years and supports Form I-9 by providing instant feedback on the information provided by new employees. Since June 11, 2008 this program has been mandatory for all new hires of all Federal departments and agencies and after September 8, 2009 became mandatory for employers participating in all Federal Contracts. Other than for these government contracts and agencies, E-Verify has been a voluntary program that anyone can register for and participate in regardless of the number of employees or where they live. Currently only Arizona employers have been required to use E-Verify, but beginning July 1, 2010 Utah employers with 15 or more employees will also be required to use the system.
How do I register or get answers to questions?
Go to the E-Verify website or call 888-464-4218 for assistance or answers to questions.
With laws changing every day we felt that it was important to remind all of our clients who hire employees of this change so they can take the necessary steps to be in compliance with the law. If you need any assistance or have any questions please feel free to contact our office.
Tuesday, June 22, 2010
Welcome
We are moving
On November 1, 2010 we will be moving into new office space located in the Ford Building at 414 South 300 West in Salt Lake City, Utah. Our new office is located just south of the Gateway Mall. Stay Tuned for more info as we get closer to our move.
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