President Barack Obama’s American Jobs Act contains both tax breaks and tax increases among its many provisions. These range from new credits for hiring unemployed workers and a temporary payroll tax cut to limits on itemized deductions and a change in the treatment of carried interests in investment partnerships. Read more»
The Treasury Department is considering a $10 million income cap for small businesses, leading some to believe it could require companies earning more than that amount to pay corporate taxes. The move could also affect larger flow-through entities such as partnerships, S corporations and limited liability companies, whose owners pay income tax but not corporate taxes on the companies’ earnings. “The administration has made it clear that it’s interested in drawing an arbitrary line and taxing firms above it,” said Brian Reardon, a lobbyist for the S Corporation Association of America. Read more»
The Tax Relief, Unemployment Insurance Reauthorization, and the Job Creation Act of 2010 (2010 Tax Relief Act, PL 111-312) built on already attractive incentives that were passed only a few months before in the Small Business Jobs Act of 2010 (PL 111-240). The 2010 Tax Relief Act steps in where the other ends, enhancing and extending business incentives, including IRC ยง 179 expensing, bonus depreciation and tax credits. See a comparison of the two acts’ primary incentive provisions, then analyze the enhanced benefit produced by combining them. Journal of Accountancy
The Obama administration plans to propose giving small businesses additional capital gains tax breaks as part of its 2012 budget, which is expected to be announced in two weeks. The plan calls for permanently eliminating capital gains taxes on investments in small businesses, which were measures put in place temporarily in the 2009 stimulus package and extended for another year in the Small Business Jobs Act. Republican leaders say Obama’s proposal doesn’t go far enough and they want a larger package of tax incentives. Read more»
The Obama administration’s efforts to reduce the corporate-tax rate could face opposition from some industries. The overhaul would require lawmakers to take away tax incentives from companies such as hedge funds and manufacturers to make up for lost revenue. Read more»
The White House might be moving toward an agreement with congressional Republicans on revisions to the corporate tax code. Proposals could include lowering the corporate tax rate significantly from 35%. The shift comes as the Obama administration boosts its efforts to win over business leaders on issues including employment and trade. Read more»
Despite having had temporary regulations on the subject declared invalid by the Tax Court, the Internal Revenue Service issued final regulations on Wednesday that define an overstatement of basis as an omission from gross income for purposes of the extended six-year limitation on assessment of tax attributable to partnership items. The final regulations make no change to the temporary regulations, which the Tax Court in May held to violate the Supreme Court’s definition of omission from gross income. Read more»
South Dakota, Alaska and Wyoming have tax laws that are the most hospitable to businesses, according to this year’s State Business Tax Climate Index by the Tax Foundation. The organization said the report is designed to educate lawmakers and help them measure their state’s performance against that of other regions. New York, California and New Jersey are the least friendly on account of complexity, high rates and fewer business exemptions. Read more»
In letters to Congress on Tuesday, the American Institute of CPAs raised concerns about the recently expanded Form 1099 reporting requirements for businesses and taxpayers who receive income from rental property. The AICPA is concerned with the “overwhelming compliance burden” the requirements will impose on taxpayers, and in its letters it urges Congress to repeal the provisions. Read more»
Because owners of a closely held business can be tempted to reduce the company’s taxable income by increasing their compensation, the Internal Revenue Service pays close attention to the reasonableness of compensation paid to owner-employees. A recent case shows the importance of analyzing compensation and return on equity from the viewpoint of an independent investor to avoid running afoul of the reasonable compensation rules, according to this article. Read more»
