Obama signed the American Recovery and Reinvestment Act of 2009 into law on February 17th, 2009 and gave us a ton of tax law changes right in the middle of tax season. As you can imagine, there is nothing we as CPAs like better than learning new tax laws as we are working 60 hour weeks!
It will definitely take me several posts to break this Act down, but here is a great summary by CCH in case you would like to read ahead.
Here are my two favorites for small business:
Five Year NOL Carrybacks
Many businesses in the Portland area that have been affected by the recession, the housing market crash, the December weather closures, and everything else that made 2008 a horrible year will appreciate this one. If you incur and net operating loss in 2008, you now have the option to carry the loss back three, four, or five years. Usually, net operating losses can only be carried back two years, so this is a great deal if you paid some tax within the five year period.
Keep in mind, this only applies to business with gross receipts of $15 million or less.
For individuals whose incomes primarily come from a small business, the new law decreases the required estimated tax payments for 2009. Usually, you are required to pay 100% (110% if AGI is >$150k) of the prior year tax, but the new law changes the requirement to 90% of the prior year (2008) tax. It is not a huge savings, but every little bit helps right now and it also means that underpayment penalties with not be as large.
Part 2 will feature the individual tax incentives and credits created by the bill.