2012 Obama Budget – Business Proposals

Here is some more information on Mr. Obama’s proposed 2012 budget…specifically some business proposals.  Here is an excerpt from the Journal of Accountancy:

Business Tax Proposals

Tax increases:

• Repeal of several deductions and credits used by oil, coal, and gas companies, including expensing of intangible drilling costs;
• Income tax benefit losses described above in “Individual Tax Proposals” that also apply to business owners.

 Tax cuts: 

• Elimination of capital gains tax on investments in small business stock;
• Enhancement and permanent extension of the research and experimentation credit;
• Energy tax credits, including tax credit for energy-efficient commercial building property expenditures (replaces existing deduction) and the IRC § 48C credit for investments in qualifying advanced energy projects;
• Permanent extension of increased section 179 expensing for small business;
• Relevant income rate cuts extended after 2012, as described above in “Individual Tax Proposals.”

 The Administration is also proposing to require certain employers to provide automatic payroll deposit IRAs available to employees and is offering the employer: (1) a temporary tax credit of $25 per enrolled employee, up to $250, and (2) a three-year increase of the startup tax credit (from $500 to $1,000) for a small employer that adopts a new retirement, SEP or SIMPLE plan.

As a small business owner, my favorite item listed above is the permanent extension for Section 179 increases.  This section of the tax code provides a great incentive to spend money…something this economy really needs from our small businesses.  Whether you’re buying a new fleet vehicle, a tricked out color scanner, or a new phone system; the Section 179 expensing means you can write it all off without having to depreciate over several years.  Of course, there are rules and limitations, so be sure to check with your CPA or accountant before any major purchases.  Happy buying people!

John Mole – Principal

Inland Accounting Services

www.inlandaccountingservices.com

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