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Better Hurry: Many Provisions of the Small Business Jobs Act of 2010 Are Short-Lived
Corporate & Business Law Group Update | 11/16/2010

On September 27, 2010, President Obama signed the Small Business Jobs Act of 2010. The Act contains numerous provisions that are designed to provide tax relief and promote job growth, but many of the benefits are only available this year or expire after 2011. Below is a brief overview of some of the key provisions:

• Temporary increase in deductions for start-up expenditures from $5,000 to $10,000 for 2010.
• 100% exclusion of capital gain from sale of certain small business stock acquired after September 27, 2010, but before January 1, 2011, if held for more than five years.
• SBA Loan limits increased for 7(a) loans, 504 loans and microloans, and new $30 Billion Small Business Lending Fund.
• Business owners now permitted to deduct health insurance costs incurred in 2010 in calculating self-employment tax and deduction requirements for cell phone costs simplified.
• Certain businesses now permitted to carryback general business credits for five years (instead of one year) and all types of general business credits can be used to offset Alternative Minimum Tax (AMT).
• Allowable Section 179 expense write-off for certain personal property used in business increased to $500,000 for 2010 and 2011 tax years and inclusion of certain real property up to $250,000.
• Accelerated 50% depreciation of property preserved through 2010.
• Holding period for avoiding built-in gains tax following conversion of C corporation to S corporation temporarily reduced from 10 years to 5 years under certain circumstances provided the 5th year in the holding period is before the 2011 tax year.
• Limitation on penalty for failure to disclose certain reportable transactions on tax return.

The Act is designed to provide access to capital and promote entrepreneurship, but businesses must act fast to take advantage of many of the Act’s benefits.

For more information regarding this topic, contact Melissa H. Sayer, or any member of the Firm’s Corporate & Business Law Group.