Provided by AIACV Corporate Partner, GALLINA, LLP. Contact is: Carey Cadle,CPA CCadle@gallina.com
President’s FY 2011 Budget Proposals Include Many Tax Changes for Businesses and Individuals
On Feb. 1, the President issued FY 2011 budget proposals, accompanied by the Treasury’s release of its “General Explanations of the Administration’s Fiscal Year 2011 Revenue Proposals” (colloquially referred to as the Green Book). The budget and the Green Book reveal that the Administration has a robust agenda of tax proposals it will push Congress to enact.
Tax proposals for business include:
- A tax credit of up to $5,000 for new workers added in 2010, plus a reimbursement for payroll taxes on wage increases.
- For 2010, permitting a maximum of $250,000 to be expensed under Code Sec. 179, with the investment-based phaseout level set at $800,000.
- Extending bonus first-year depreciation to apply to property placed in service in 2010.
- Allotting an additional $5 billion in tax credits for investment in advanced energy manufacturing projects.
- A zero percent capital gains tax on qualified small business stock held for at least five years, effective for stock acquired after Feb. 17, 2009.
- Making permanent the research credit (which under current rules went off the books at the end of 2009).
- Making permanent the Build America Bonds program.
- Removing company provided cell phones from the listed property category, effective for tax years ending after the enactment date.
- Repealing the lower-of-cost-or-market inventory accounting method, effective for tax years beginning after twelve months from the enactment date.
- Repealing the LIFO accounting method for inventories. Those currently using the LIFO method would be required to write up their beginning LIFO inventory to its FIFO value in the first tax year beginning after 2011. However, this one-time increase in gross income would be taken into account ratably over ten years, beginning with the first tax year beginning after 2011.
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