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Congress Approves Small Business Tax Bill with $12 Billion in Tax Benefits

Congress approved a package of enhanced small business tax incentives, as part of a larger Small Business Jobs Act of 2010, H.R. 5297. The Senate passed the measure on September 16, 2010. The House subsequently passed the legislation on September 23, 2010. The new law extends bonus depreciation, extends and doubles Code Sec. 179 expensing, provides for 100 percent gain exclusion for qualified small business stock, relaxes the S corp built-in gain conversion rules, allows five-year carrybacks of the general business credit for qualified taxpayers, removes cell phones from the listed property rules, enhances the deduction for start-up expenses, provides retroactive Code Sec. 6707A penalty relief, and allows a self-employment income tax deduction for 2010 health care expenses. Revenue raising provisions to help pay for these tax breaks include increased failure-to-file penalties on information returns, a controversial new information reporting rule for rental property expense payments, tightened U.S. sourcing on guaranteed fees, streamlined tax levies on federal contractors, accelerated estimated tax payments by certain large corporations, and more.

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