After all the politicking, President Obama finally signed into law last week the $787 billion recovery package designed to give a much needed boost to the U.S economy. Contained in the hundreds of provisions and over 1,000 pages of this bill are many opportunities for small businesses. You just need a little patience to sift through it all. To get you started I compiled a summary of a few of the provisions that may benefit many small business owners. (Both the NY Times and the Wall Street Journal have more detailed summaries of the recovery package online.)
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Increase deduction on capital investments. Businesses can recieve a 50 percent bonus deduction on capital investments made in 2008 that would normally be depreciated over many years. Businesses can choose to accelerate refunds of research and development credits and alternative minimum tax credits in lieu of bonus depreciation.
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Allow more small business deductions. Allow businesses to deduct up to $250,000 for capital investments made in 2009, with a total cap of $800,000. The limits were temporarily increased by Congress last year for investments made in 2008. Prior to that, small businesses could write-off $125,000 for capital expenditures, with a total cap of $500,000.
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Delay recognition of certain cancellation of debt income. Allow some businesses to defer tax on income that is recognized when they buy back their debt at a discount.
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Expand net operating loss carry-back provision for small businesses. Allow small businesses with annual receipts under $15 million to cut taxes by writing off
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Expand the tax break for small business stock sales. Allow small businesses to exclude up to 75 percent of the gain from the sale of some stock held for more than five years.
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Develop business in depressed communities. Increase funding for state-wide programs that provide incentives for businesses to locate in economically distressed communities.
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Expand use of industrial development bonds. Allow small-issue industrial development bonds for “creation of intangible property” in the next two years. Industrial development bonds are tax-exempt bonds issued by a state or local government to finance manufacturing or production of “tangible personal property.”
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Incentive for advanced energy investment. Establish a new 30 percent investment tax credit for manufacturers of advanced energy property, which may include technology for the production of renewable energy, energy storage, energy conservation, efficient transmission and distribution of electricity, and carbon capture and sequestration.
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Support battery manufacturing. Provide grants to manufacturers of advanced battery systems and car batteries in the United States.
Aside from these provisions, several other provisions may indirectly effect small businesses. Some examples include: improvement in transportation and clean energy initiatives, the repair of facilities on public lands and parks, the repair and modernization of public housing units as well as abandoned and foreclosed homes. Small businesses could benefit by securing government contracts directly or assisting the bigger companies that secure them.
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