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SUMMARY:The Worker\, Homeownership\, and Business Assistance Act of 2009 Contains Noteworthy Tax Incentives and Extenders
DESCRIPTION:On Friday\, Nov. 06\, 2009\, The Worker\, Homeownership\, and Business Assistance Act of 2009 (the Act) was signed into law by President Obama. While the primary emphasis of the legislation is the extension of unemployment benefits\, the Act also extends a few tax incentives or relief measures for businesses and individuals and imposes certain revenue generating measures to offset the anticipated costs of the tax benefits. A summary of some of the Act’s tax provisions are provided below.\nTax Provisions Applicable to Businesses\nFive-Year Carryback of NOLs. Earlier this year\, Congress permitted certain “small” businesses (gross receipts of $15 million or less) to have an extended net operating loss carryback (up to five years) for losses incurred in a tax year beginning or ending in 2008. The Act expands this election by making it available to most non-TARP recipient taxpayers\, including life insurance companies\, with net operating losses for taxable years ending in 2008 or 2009 (i.e.\, the taxpayer gets to choose a single year). A small business that was eligible under the earlier legislation to elect the extended carryback can now make the election for two tax years (rather than just one as the earlier legislation provided). The amount of net operating loss that can be carried back to the fifth taxable year preceding the loss year cannot exceed 50% of the taxable income for that year\, but small businesses making the carryback election that were eligible under the prior act are not limited in this way. The Act\, however\, suspends the 90% limitation on the use of net operating losses for AMT purposes. In short\, the Act essentially doubled the potential benefit for small taxpayers and permits large taxpayers to elect the extended NOL carryback for either years ending in 2008 or 2009. Once made\, however\, the election is irrevocable. The Act gives broad authority to the Treasury to issue anti-abuse regulations including anti-churning rules (including sale/leaseback)\, anti-stuffing rules\, and rules similar to the wash sale rules.\nIncreased Penalty for Failure to File Partnership or S Corporation Returns. The penalty that currently is imposed for failure to file a partnership or S corporation return is $89 multiplied by the number of partners or shareholders for each month (or fraction of a month) that the failure continues\, up to a maximum of 12 months for returns required to be filed after Dec. 31\, 2008. Under the Act\, the base amount on which a penalty is computed for a failure with respect to filing either a partnership or S corporation return for a tax year beginning after Dec. 31\, 2009\, is more than doubled to $195 per partner or shareholder.\nAdditional FUTA Surtax Is Extended for One and a Half Years. The Federal Unemployment Tax Act (FUTA) tax rate is currently set to drop from 6.2% to 6.0% beginning in 2010. The Act provides that the 6.2% FUTA tax rate will continue to apply through June 2011\, and the 6.0% rate will apply for the remainder of calendar year 2011 and for later years.\nEstimated Tax Payments For Large Corporations Increased For 2014. The Corporate Estimated Tax Shift Act of 2009 signed into law on July 28\, 2009\, provides that for large corporations (those with assets of not less than $1 billion as of the end of the preceding tax year)\, the amount of the required installment of corporate estimated tax that is otherwise due in July\, August\, or September 2014 will be 100.25% of the amount otherwise due. The amount of the next required installment is appropriately reduced to reflect the amount of the increase to 100.25% in the earlier installment. The Act increases these required payments of estimated tax by 33%.\nDelay in Application of Worldwide Allocation of Interest. The Act delays the effective date of the worldwide interest allocation rules that were set to take effect for tax years beginning after Dec. 31\, 2010\, by seven years\, until tax years beginning after Dec. 31\, 2017. It also eliminates the special transition rule that applies in the case of the first tax year to which the worldwide interest allocation rules apply.\nTax Provisions Applicable to Individuals\nHomebuyer Credit Extended and Liberalized. Under the Act\, the $8\,000 ($4\,000 if married filing separately) first-time homebuyer credit is extended to apply to purchases of principal residences occurring before May 1\, 2010 (or before July 1\, 2010\, by any taxpayer who enters into a written binding contract before May 1\, 2010\, and closes on the purchase before July 1\, 2010). The Act also makes a reduced credit ($6\,500 ($3\,250 if married filing separately)) available to existing homeowners who are “qualifying long-time residents” (any individual (and\, if married\, the individual&#39\;s spouse) who has maintained the same principal residence for any five-consecutive-year period during the eight-year period ending on the date of the purchase of a subsequent principal residence). For purchases after the Act’s enactment date\, the credit cannot be claimed for buying a residence with a purchase price in excess of $800\,000. In addition\, the Act includes new anti-abuse provisions. The recapture rules and acquisition dates are liberalized with respect to certain military service\, Foreign Service or intelligence agency members. For purchases made after the enactment date\, the credit phases out for individual taxpayers with modified adjusted gross income between $125\,000 and $145\,000 ($225\,000 and $245\,000 for joint filers) for the year of purchase.\nFor additional information please contact Leigh Griffith [http\://www.wallerlaw.com/attorneys/2007/06/11/griffith-j-leigh.4828]\, Jon Gaston [http\://http\://www.wallerlaw.com/attorneys/2007/06/11/gaston-jon-parker.4805]\, Shane Morris [http\://www.wallerlaw.com/attorneys/2007/06/11/morris-shane-p.4730]\, or any member of the Waller Lansden Tax [http\://http\://www.wallerlaw.com/services/healthcare/tax] practice at 800-487-6380.\nWE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOREGOING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED\, AND IT CANNOT BE USED\, NOR RELIED UPON\, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.\nThe opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always\, readers should consult a qualified attorney for specific legal guidance.\n
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CATEGORIES:tax
CLASS:PUBLIC
SEQUENCE:1
DTSTAMP:20120208T094718
CREATED;TZID=US-Central:20091118T172921
LAST-MODIFIED;TZID=US-Central:20091118T172922
DTSTART;VALUE=DATE:20091110
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