Tax Implications of the Small-Business Aid Bill
Posted on Thu, Sep 16, 2010 @ 04:17 PM
The U.S. Senate approved $12 billion in tax breaks as part of the Small Business Jobs and Credit Act of 2010, but additional relief was 
rejected to speed the passage of the overall bill.
Attempts to make permanent a research and development tax credit and to extend by one year a credit for biofuels failed, according to The Wall Street Journal. Sen. Charles Grassley, R-Iowa, also had sought a 20 percent tax deduction from businesses’ earnings, according to an Associated Press story in The New York Times.
According to the Associated Press, the following tax measures passed.
- The ability for small-business owners to deduct health insurance costs from self-employment taxes for the 2010 tax year.
- Exemptions from paying capital gains taxes for long-term investors in qualifying businesses.
- Breaks for restaurant owners and retailers who remodel or build new stores.
The Wall Street Journal reported that the bill also included a 50% write-off of new equipment purchases in 2010 and doubled, to $500,000, the new investment that small businesses can expense in 2010 and 201.
Senators also approved $30 billion in loan funds, which would be leveraged by community banks, as part of the bill. The measure will go to the House of Representatives and then, pending approval there, to President Barack Obama for his signature.
The legislation will be funded largely by allowing taxpayers to convert of 401(k) and government retirement accounts into Roth IRAs, in which account holders pay taxes up front so that they can withdraw funds tax-free after retirement, according to the Associated Press.
