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Be Patient - Your friend has just gone out and bought a state of the art computer with all the bells and whistles and after looking at your slowpoke old...

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Small Business Tax Break

The Internal Revenue Service is urging small businesses to act immediately and utilize tax-saving opportunities included in The American Recovery and Reinvestment Act (ARRA). This act created, expanded, or extended several business tax deductions and credits.

Because some of these changes are only available this year, eligible businesses don't have much longer to take action and save on their taxes. Here is a quick list of some of the key things you need to know about this Act:

First, many small businesses that invest in new property and equipment will be able to write off most or all of these purchases on their 2009 returns. The new law extends through 2009 the special 50 percent depreciation allowance, also known as bonus depreciation, and increased limits on the section 179 deduction, named for the relevant section of the Internal Revenue Code.

Normally, businesses recover these capital investments through annual depreciation deductions spread over several years. Both of these provisions encourage these investments by enabling businesses to write them off more quickly.

The bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service.

Also, many small businesses that had expenses exceeding their incomes for 2008 can choose to carry those losses back for up to five years, instead of the usual two. For small businesses that were profitable in the past but lost money in 2008, this could mean a special tax refund.

This option is still available for most eligible taxpayers, but only for a limited time. A corporation that operates on a calendar-year basis, for example, must file a claim by Sept. 15, 2009. For eligible individuals, the deadline is Oct. 15, 2009.

In addition, the new law provides an extra incentive for individuals who invest in small businesses. Investors in qualified small business stock can exclude 75 percent of the gain upon sale of the stock. This increased exclusion applies only if the qualified small business stock is acquired after Feb. 17, 2009 and before Jan. 1, 2011, and held for more than five years. For previously-acquired stock, the exclusion rate remains at 50 percent in most cases.

Estimated tax requirements are also modified and there are new rules for COBRA as well--be sure to check with the IRS for more details on these two areas.

Discuss It!

John said:

Man these taxes.. Everything would be easier If the taxes were low and simple. Why the government always have to complicate things? I don't know. They always seem to know better, but simple economy always prove them wrong.

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Showbox on IPhone or IPad is practically not possible since iOS platform doesnât support and execute this app.

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