October 1, 2010 12:00 am

Small Business Jobs Act Becomes Law

On September 27, 2010, the president signed into law the Small Business Jobs Act of 2010. The act contains $12 billion in tax cuts for businesses, small and large.

Key tax provisions include:

  • A deduction for self-employment tax purposes for medical premiums of self-employed individuals, saving them a little more than 15% of the tax that would otherwise have been due on the premium amount
  • Removal of cellular phones from “listed property” so that record keeping is simplified
  • Doubling of the first-year (Section 179) deduction to $500,000 for 2010 and 2011. This deduction applies to qualified leasehold, restaurant, and retail improvements up to $250,000
  • Extending 50% bonus depreciation for 2010 (which means a higher write-off for new business car, light truck, and van purchases this year)
  • Doubling the immediate write-off for start-up costs to $10,000
  • 100% exclusion for gain from the sale of qualified small business stock of a C corporation held at least five years for stock purchased after September 27, 2010, and before January 1, 2011
  • Five-year carryback of the general business credit for small businesses

To help pay for the tax cuts there is a new reporting requirement for those who own rental property. They must report payments of $600 or more in the year to service providers, such as plumbers, painters, and accountants.

Source: H.R. 5297

Tax Glossary

Passive activity loss rules

Rules that limit the deduction of losses from passive activities to income from other passive activities. Passive activities include investment rental operations or businesses in which you do not materially participate.

More terms