Will New Investment Tax Credit Spur New Purchases?

The Small Business Jobs and Credit Act of 2010 is finally law. The ACT increases for 2010 and 2011 the amount of investments that businesses would be eligible to immediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year. In addition the 50% bonus depreciation has been extended through 2011. Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes.

The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision called for by the President – elimination of all capital gains taxes on these investments if held for five years, and The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with a break on their taxes for this year – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.

Credit goes to Terry Winders for this recap of the Small Business Jobs and Credit Act of 2010.

Terry can be reached at leaseconsulting@msn.com.

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