What Tax Breaks Were Extended for 2010?

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by Jim Wagoner, CPA, Partner, Director Tax Services

Many business tax breaks expired at the end of 2009. Unless Congress acted to retroactively revive them, all of the following business tax breaks will not be available this year because they expired at the end of 2009. The tax breaks that would be extended by the “Tax Extenders Act” as passed by the House of Representatives in December of 2009 are indicated with an asterisk (*) below.

  • Additional first-year 50% bonus depreciation for qualified property under Code Sec. 168(k)(2) (but note that certain aircraft and long-production-period property continues to be eligible if placed in service in 2010). In addition, the $8,000 increase in the first-year depreciation limit for passenger automobiles that are qualified property also expired at the end of 2009.
  • For tax years beginning in 2010, (a) the maximum amount that may be expensed under Code Sec. 179 is $134,000 (down from $250,000 for tax years beginning in 2008 or 2009); and (b) the maximum annual expensing amount generally is reduced dollar-for-dollar by the amount of Code Sec. 179 property placed in service during the tax year in excess of $530,000 (down from $800,000 for tax years beginning in 2008 or 2009).
  • Election to accelerate AMT and research credits in lieu of additional first-year depreciation.
  • Credit for construction of new energy efficient homes.
  • Suspension on the taxable income limit for purposes of claiming depletion deductions on a marginal oil or gas well.
  • * Incremental research credit.
  • * Five-year depreciation for farming business machinery and equipment.
  • * Fifteen-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
  • * Deduction allowable for income attributable to domestic production activities in Puerto Rico.
  • * Expensing of “brownfields” environmental remediation costs.
  • * Encouragement of contributions of capital gain real property made for conservation purposes. 
  • * Enhanced charitable deduction for contributions of food inventory.
  • * Enhanced charitable deduction for contributions of book inventories to public schools.
  • * Enhanced deduction for corporate contributions of computer equipment for educational purposes.
  • * The active financing exception from Subpart F of the Code.
  • * The look-through treatment of payments between related controlled foreign corporations.
  • * Seven-year straight line cost recovery period for property used for land improvement and support facilities at motorsports entertainment complexes.
  • * Accelerated depreciation for business property on an Indian reservation.
  • * The railroad track maintenance credit.
  • * Film and television producers” election to expense the first $15 million of production costs incurred in the U.S. ($20 million if the costs are incurred in economically depressed areas in the U.S.).
  • * The credit for training mine rescue team members.
  • * Election to expense 50% of the cost of qualified underground mine safety equipment.
  • * The credit for eligible small business employers equal to 20% of the sum of differential wage payments to activated military reservists.
  • * The tax treatment of interest-related dividends, short-term capital gain dividends, and other special rules applicable to foreign shareholders that invest in regulated investment companies (RICs). 
  • * The new markets tax credit.