The House of Representatives passed the “rescue” legislation this afternoon. The president immediately stated that he would sign the bill as soon as it reaches his desk. My copy of the bill submitted to the House for consideration is 451 pages. The following is a very brief highlight of the tax provisions affecting Main Street individuals, businesses, and charitable organizations contained in the bill.
PROVISIONS AFFECTING INDIVIDUALS:
- Extension for tax year 2008 and increase in AMT exemption amount from $66,250 to $69,950 for married joint returns and surviving spouses; $33,125 to $34,975 for married filing separately; $44,350 to $46,200 for single taxpayers.
- Increase in the amount of AMT tax carryovers from certain prior years that can be applied to reduce regular income tax.
- Abatement of penalty and interest on underpayment of AMT related to Incentive Stock Options for all prior years.
- Deduction for state and local sales taxes extended through 2010.
- Deduction for tuition and related expenses extended through 2009.
- Deduction for certain expenses of elementary and secondary school teachers extended through 2009.
- Extension of additional itemized deduction for real property taxes of non-itemizer taxpayers extended through 2009.
- Eight-thousand five-hundred income threshold used to calculate refundable portion of child tax credit (reduction from $10,000).
PROVISIONS AFFECTING BUSINESSES:
- Research tax credit extended and increased through 2009.
- Extension of 15-year straight-line cost recovery for qualified leasehold improvements extended through 2010.
- Fifteen-year straight-line cost recovery for new construction of qualified restaurant improvements placed in service in 2009.
- Fifteen-year straight-line cost recovery for certain improvements to retail space placed in service in 2009.
- Seven-year cost recovery period for motorsports racing track facility through 2009.
- Certain farming business machinery and equipment treated as 5-year property placed in service before 2010
PROVISIONS AFFECTING CHARITABLE ORGANIZATIONS:
- Tax-free distributions from individual retirement plans for charitable purposes extended through 2009.
- Favorable tax treatment of certain payments to controlling exempt organizations extended through 2009.
- Decrease in basis adjustment to stock of S corporations making charitable contributions of property extended through 2009.
- Enhanced deduction for qualified computer contributions extended through 2009.
- Enhanced charitable deductions for contributions of food inventory extended through 2009.
- Enhanced charitable deduction for contributions of book inventory extended through 2009.
SPECIAL PROVISIONS
There are provisions, not necessarily affecting Main Street, dealing with:
- Compensation of executives of firms that participate in the rescue program.
- The coal industry and carbon mitigation (study ordered of the Internal Revenue Code on provisions related to carbon mitigation).
- Transportation and renewable fuels (including provision to permit non-taxable fringe benefits to bicycle commuters).
- Increase and extension for one year of the tax credit for biodiesel and renewable diesel fuels for all taxpayers.
- A new credit for owners of plug-in electric cars ($2,500 plus an amount for excess battery storage capacity) with higher amounts for vehicles of greater weight.
- Federally designated disaster areas impacted by Midwest flooding and Hurricane Ike.
This is only a brief summary of the tax provisions of the bill. If you have specific questions concerning this new and important legislation and how they will affect you, please contact me at response@phdcpa.com or call me at 214.957.3366.
Ronnie
© 2008 Ronnie C. McClure, PhD, CPA
